Nigeria’s debt to gasoline suppliers has exceeded $6 billion, doubling since early April, due to the state oil firm NNPC’s difficulties in bridging the gap between fixed pump prices and international fuel costs, according to six industry sources.
President Bola Tinubu of Nigeria announced the end of costly fuel subsidies last year, resulting in a tripling of pump prices.
However, NNPC subsequently imposed caps on pump prices amidst public discontent over the escalating cost of living, contributing to the current situation where Nigeria’s debt to gasoline suppliers has risen to over $6 billion, doubling since early April, according to six industry sources.
The imposition of caps, combined with a depreciation of the naira, allowed the subsidy to gradually return. Tinubu’s administration anticipates that the subsidy will amount to at least $3.7 billion this year.
Analysts, NGOs, and government officials have consistently condemned the subsidy as inefficient and prone to corruption over the years. Despite these criticisms, many Nigerians, who experience minimal government services, consider access to cheap fuel a basic entitlement, particularly amid the ongoing economic challenges that affect the cost of living.
NNPC faced early challenges this year as overdue payments for gasoline exceeded $3 billion. According to traders, the company has yet to settle payments for some January imports, resulting in total outstanding late payments estimated between $4 billion and $5 billion. Contractually, NNPC is obligated to settle payments within 90 days of delivery.
